Citation Nr: 0521480
Decision Date: 08/09/05 Archive Date: 08/19/05
DOCKET NO. 98-16 061A ) DATE
)
)
On appeal from the
Department of Veterans Affairs (VA) Regional Office (RO)
in St. Petersburg, Florida
THE ISSUE
Entitlement to waiver of recovery of overpayment of
dependency and indemnity compensation (DIC) benefits in the
amount of $60,477.
REPRESENTATION
Appellant represented by: Disabled American Veterans
WITNESSES AT HEARING ON APPEAL
Appellant and her spouse
ATTORNEY FOR THE BOARD
C. L. Wasser, Counsel
INTRODUCTION
The veteran served on active duty from December 1945 to
December 1946, and from August 1947 to February 1961. He
died in 1979, and the appellant is his widow.
This case comes to the Board of Veterans' Appeals (Board) on
appeal from a July 1998 decision by the Committee on Waivers
and Compromises (Committee) of the St. Petersburg RO, which
denied the appellant's claim for waiver of recovery of an
overpayment of $60,477 in VA DIC benefits. A personal
hearing was held before the Committee in June 1998. In March
2002, the Board determined that waiver of the indebtedness
was not precluded by fraud, misrepresentation or bad faith,
and remanded the case to the RO for further evidentiary
development. The case was subsequently returned to the
Board. In August 2004, the Board again remanded the case to
the RO in order to obtain a current financial status report
from the appellant. The case was subsequently returned to
the Board.
FINDINGS OF FACT
1. All relevant evidence necessary for an equitable
disposition of the appeal has been obtained.
2. The appellant and the veteran were married in November
1955. He died in February 1979.
3. In a March 1979 decision, the RO determined that the
appellant was entitled to DIC benefits.
4. The appellant was notified of the March 1979 decision in
a May 1979 letter and was provided a VA Form 21-6753; this
form notified the appellant that payments to a surviving
spouse would be discontinued upon remarriage or death; that
if she remarried she was not to endorse any check made to her
as the veteran's surviving spouse; and that all checks should
be returned with a statement showing the date of the
remarriage so that her payments could be properly adjusted.
5. The appellant remarried in July 1992.
6. The appellant should have known that reporting a
remarriage to the DFAS (Defense Finance and Accounting
Service), located in Denver, Colorado would not serve to
advise VA of her remarriage.
7. VA first received notice from the appellant of her
remarriage in November 1997.
8. Thereafter, the RO retroactively terminated the
appellant's DIC benefits effective August 1, 1992, creating
an overpayment in the amount of $60,477.
9. The appellant was solely at fault in the creation of the
overpayment of DIC benefits by virtue of her failure to
report her change in marital status to VA in a timely manner;
fault on the part of the VA has not been shown.
10. Recovery of the overpayment of DIC benefits would not
deprive the appellant of the ability to provide for life's
basic necessities; failure to repay the debt would result in
unfair gain to the appellant.
11. Recovery of the overpayment would not defeat the purpose
of DIC benefits.
12. Reliance on VA benefits did not result in relinquishment
of a valuable right or the incurrence of a legal obligation.
13. There are no other factors that would make recovery of
the overpayment inequitable.
CONCLUSION OF LAW
Recovery of an overpayment of pension benefits in the amount
of $60,477.00 would not be against equity and good
conscience. 38 U.S.C.A. § 5302 (West 2002); 38 C.F.R. §§
1.963, 1.965 (2004).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
VCAA
The notice and duty to assist provisions of the Veterans
Claims Assistance Act of 2000 (VCAA) are inapplicable to
waiver claims. Barger v. Principi, 16 Vet. App. 132 (2002).
Nonetheless, the appellant has been provided many
opportunities to provide additional evidence, and she has
submitted written arguments and testimony, as well as
documentary evidence.
The Board also notes that the appellant has not challenged
the validity of the indebtedness; nor does there appear to be
any reason to believe that the debt was improperly created.
As such, that question need not be examined further. See
Schaper v. Derwinski, 1 Vet. App. 430 (1991).
Factual Background
The veteran served on active duty from December 1945 to
December 1946, and from August 1947 to February 1961. During
his lifetime he was service-connected for schizophrenia,
rated 100 percent disabling for many years.
Records reflect that the appellant and the veteran were
married in November 1955.
The veteran's death certificate reveals that he died in
February 1979.
Records reflect that during the veteran's lifetime, the
appellant corresponded extensively with the RO regarding the
veteran's incompetency and regarding an apportionment of his
VA disability benefits. All of her letters were mailed to
the St. Petersburg RO.
In a March 1979 decision, the RO determined that the
appellant was entitled to DIC benefits. She was notified of
such in a May 1979 letter and was provided a VA Form 21-6753.
This form notified the appellant that payments to a surviving
spouse would be discontinued upon remarriage or death. If
she remarried, she was instructed not to endorse any check
made to her as the veteran's surviving spouse. All such
checks should be returned with a statement showing the date
of the remarriage so that her payments could be properly
adjusted. She was also advised that failure to promptly
notify VA of any condition affecting her right to continued
payments might result in the discontinuance of her award
retroactively, creating an overpayment of benefits that would
be subject to recovery.
In a June 1980 letter the appellant wrote to the Treasury
Department that she had communicated with the RO regarding a
missing check.
In October 1997, the RO contacted the appellant and requested
marital information. Via a marital status questionnaire (VA
Form 21-0537), received in November 1997, the appellant
indicated that she had remarried in July 1992. By a letter
dated in November 1997, the appellant enclosed a copy of a
return receipt from the U.S. Postal Service, date-stamped in
August 1992. This card reflects that an item was mailed to
"Veterans Administration, DFAS-DE/RM" (Defense Finance and
Accounting Service), located in Denver, Colorado. The
appellant's name and address were written on the reverse side
of the return receipt.
In her November 1997 letter to the RO, the appellant said,
"Unfortunately, I recently destroyed my copy of the letter I
mailed, as it has been five years so I assumed you had
completed your evaluation."
In November 1997, the RO notified the appellant of the
termination of her award of DIC benefits effective from
August 1, 1992, based upon her remarriage. The appellant was
thereafter notified by VA of the amount of the overpayment,
$60,477.00, created by the retroactive termination of her
benefits.
In December 1997, the appellant requested a waiver of
recovery of the overpayment of DIC benefits. She indicated
that she could not repay the indebtedness. She asserted that
she notified "the office in Denver" of her remarriage in
August 1992.
By a statement dated in January 1998, the appellant asserted
that one month after her remarriage in 1992, she mailed a
letter to VA with notification of such remarriage. She
contended that this letter was mailed to VA by certified mail
with return receipt requested. After she received the return
receipt, she assumed that VA had received her correspondence.
She said that when she did not hear from VA, and the checks
continued to arrive, she assumed she was still entitled to
DIC benefits. She enclosed a marriage certificate reflecting
that she remarried in July 1992.
In a financial status report submitted in April 1998 (and
signed by the appellant and her husband at a hearing in June
1998), the appellant reported that she and her husband were
retired. (The hearing transcript reflects that this report
was annotated by the hearing officer at the hearing, after
discussion with the appellant and her husband.) The
appellant reported that she had monthly state retirement
income of $1,287, and monthly income from the Social Security
Administration (SSA) of $734, for a total monthly income of
$2,021. She reported that her husband received the
following income on a monthly basis: $800 in SSA income,
$289 from Florida Steel, $659 in military retirement income,
for a total monthly income of $1,748. She reported total
monthly living expenses of $1,829, including a monthly
mortgage payment of $400, and reported total monthly
installment payment on debts and credit cards as $1,156. She
reported that they had $3,408 in the bank, three cars worth a
total of $26,300, $50 in savings bonds, $28,707 in stocks or
other bonds, $15,411 in mutual funds, and real estate worth
$115,000. In an attached spreadsheet, she reported the
expenses previously noted, as well as monthly medical
expenses of $43, and annual membership fees in various
organizations totaling $1000.
In an attached statement also received in April 1998, the
appellant contended that she had notified VA of her
remarriage soon after it occurred. She said that if she had
known she was not entitled to the benefits she would not have
used the money. She stated, "I believe that the veteran
administration and I both share equal responsibility for my
indebtedness. I did notify you as my returned notice for
certified mail will indicate. Apparently someone failed to
complete the transaction until five years later." She added
that the money in her retirement accounts was money she had
saved in annuities prior to 1992, and that she did not have
$60,000.00.
At a June 1998 hearing before the Committee, the appellant
and her husband provided testimony regarding the
circumstances of her remarriage. She asserted that she had
notified VA of her remarriage in August 1992, by mail to the
DFAS with return receipt requested, and said that despite her
notification she continued to receive DIC, and therefore
believed she was entitled to it, until she was recently
informed otherwise. At the hearing the appellant and her
husband reviewed their financial status report with the
hearing officer. The appellant indicated that she had only
one more mortgage payment due on her house. In conjunction
with her hearing the appellant submitted photocopies of VA
documents relative to the grant of DIC in May 1979, including
VA Form 21-6753 and attachments she received at that time.
The appellant submitted another financial status report in
August 1998. This report, although typewritten instead of
handwritten, is essentially a duplicate of the June 1998
financial status report, except that the appellant's total
monthly income was listed as $1,760. She did not report the
Social Security income of herself or her spouse.
In December 1998 the appellant submitted a copy of a Retiree
and Annuitant newsletter, dated in September 1992 from DFAS,
which included Directory Assistance. The section entitled
"Retired Pay, Annuities and VA Disability Compensation
Applied To Retired Pay (OPR: Defense Finance And Accounting
Service - Denver Center)" was checked. Under this
designation, retirees and survivor annuitants are provided
addresses to contact FFSA-DE/RT in Denver, Colorado regarding
all retired pay matters, annuity accounts, and to report
changes in marital status or addresses relative to those
accounts. On the same page of that directory, information
specifically regarding VA benefits is provided. Under the
designation, "VA Insurance, VA Benefits, or VA Disability
Compensation (OPR: Department of Veterans Affairs),"
inquiries concerning "VA benefits or disability compensation
and claims," are directed to "contact your nearest VA
regional office." DFAS was clearly identified as an agency
of the Defense Department.
The appellant in her statements and testimony maintains that
she timely notified VA of her remarriage in July 1992, as
evidenced by the August 1992 postal return receipt. She
contends that while the correspondence represented by this
receipt is no longer available, it informed VA of her
remarriage in order for VA to evaluate her claim and
determine if she was still entitled to receive benefits.
With respect to the mailing address used for the purported
August 1992 correspondence, the appellant indicated that she
relied on information contained in the directory assistance
section of a news bulletin distributed to military retirees,
which directed her to the Denver, Colorado address.
It is the appellant's contention that because the
correspondence was accepted by an employee of the DFAS (the
addressee), albeit the wrong office, it was the
responsibility of that office to forward the correspondence
to VA. It is asserted that an implied relationship exists
between the DFAS and VA by virtue of the listing of contact
references contained in the retiree periodical. Thus, the
appellant contends that her actions with respect to the
August 1992 mailing satisfied the VA notice requirement
concerning remarriage of a surviving spouse in receipt of DIC
benefits. Alternatively, the appellant asserts that any
assessment of fault in this matter should be equally assigned
to her and VA, since VA failed to act on the notice of her
remarriage in a timely matter.
In a March 2002 decision, the Board determined that the
overpayment in question was not created through fraud,
misrepresentation of a material fact, or bad faith on the
part of the appellant.
In April 2002, the RO wrote to the appellant and asked her to
complete and return a current financial status report. The
appellant did not reply.
In August 2004, the Board again remanded the case to the RO
in order to obtain a current financial status report from the
appellant.
By a letter to the appellant dated in December 2004, the RO
asked her to complete a financial status report, and to
submit any additional evidence or arguments to support her
claim.
In reply, the appellant submitted a letter in December 2004,
in which she wrote, "In forcible no." In another
statement, she wrote, "Am stroke no November 24, 2000."
She also enclosed a financial status report dated in December
2004. The entries on this form are somewhat contradictory,
and it appears that the appellant may not have filled in the
form correctly. She stated that she had a monthly gross
salary of $1,609, before deductions, and that her total
deductions were $2,302. She also said her total monthly net
income was $2,302. She listed monthly living expenses of
$880. She stated that she had $19,078 in the bank, other
assets totaling $19,875, three cars worth a total of $5,300,
and total assets of $38,953. She reported debts for various
credit cards, and insurance, and property tax, but the exact
amounts due are unclear. She indicated that no amounts were
past due.
VA records show that the appellant has been making payments
of $200 per month on the indebtedness. As of February 2005,
she had repaid $15,800 of the indebtedness.
Analysis
The appellant asserts that she carried out her
responsibilities as a DIC recipient to the best of her
ability. She contends that she notified the VA of her
remarriage by way of the DFAS. She also contends that it
would be a financial hardship for her to repay the
overpayment.
The Board notes that it is the responsibility of the DIC
recipient to notify VA of all circumstances that will affect
entitlement to receive DIC, and such notice must be provided
when the recipient acquires knowledge that her marital status
has changed. See 38 C.F.R. § 3.660(a)(1) (2004).
Pursuant to 38 U.S.C.A. § 5302(c) and 38 C.F.R. § 1.965(b), a
finding of fraud, misrepresentation, or bad faith precludes a
grant of a waiver of recovery of an overpayment. The Board
has concluded that the facts in this case do not show these
mandatory bars to waiver in the appellant's case. Despite
the most recent supplemental statement of the case, which
refers to bad faith, the RO previously denied the appellant's
claim for waiver on the basis that recovery of the
overpayment would not be against equity and good conscience.
38 U.S.C.A. § 5302(a) (West 2002); 38 C.F.R. § 1.963(a)
(2004). The Board will now consider whether recovery of the
overpayment from the appellant would be against equity and
good conscience.
The standard of "equity and good conscience" will be
applied when the facts and circumstances in a particular case
indicate a need for reasonableness and moderation in the
exercise of the Government's rights. The decision reached
should not be unduly favorable or adverse to either side.
The phrase equity and good conscience means arriving at a
fair decision between the obligor and the government. In
making this determination, consideration will be given to the
following elements, which are not intended to be all
inclusive: (1) the fault of the debtor, (2) balancing of
fault between the debtor and VA, (3) undue hardship of
collection on the debtor, (4) the defeat of the purpose of
any existing benefit, (5) the unjust enrichment of the
appellant, and (6) whether the appellant changed positions to
her detriment in reliance upon a granted VA benefit. 38
U.S.C.A. § 5302 (West 2002); Kaplan v. Brown, 9 Vet. App. 116
(1996); 38 C.F.R. § 1.965(a) (2004).
In evaluating whether equity and good conscience necessitates
a favorable waiver decision, the Board must consider all of
the specific enumerated elements.
The appellant's contentions go largely to the question of
fault in creation of the debt. Her contention that she
notified DFAS of her remarriage, and that this notification
served to inform VA of her remarriage is unavailing.
First, DFAS is an agency of the Defense Department and not
VA. Clearly a communication with the former, could not serve
to provide notice to the latter.
The appellant's contentions could be read as saying that she
mistakenly believed that a communication with DFAS was a
communication with VA. The newsletter she submitted clearly
shows that DFAS had told her to communicate with the VA RO,
and not DFAS, with regard to reporting remarriage to VA.
Further, the appellant had dealt with the RO on numerous
other occasions, and had received notice at the time of her
DIC award that she should report changes in marital status to
VA. There is no credible basis for believing that the
appellant could have thought that communication with DFAS
would relieve her of an obligation to communicate with VA, or
that she was unaware of the difference between DFAS and VA.
A copy of the letter sent to DFAS could perhaps have shed
some light on the appellant's understanding, but she
amazingly destroyed this letter, while saving the receipt of
its mailing. In any event, the evidence is overwhelming that
the appellant was informed of the proper steps to report her
remarriage. As a person experienced in dealings with VA, it
is not plausible that she misunderstood the steps to report
her remarriage.
There is no record that the appellant notified VA of her
change in marital status prior to November 1997, when the RO
solicited that information from her.
The Board therefore concludes that the appellant was duly
informed of her obligation to timely report changes in
marital status, yet she failed to promptly report her
remarriage to VA, which led to the creation of the
overpayment in this case.
There is no indication of any fault on the part of the VA in
the creation of the overpayment, since prompt action was
taken by the RO in 1997 to adjust the appellant's benefits
upon learning of her remarriage in 1992. It is clear that
the appellant's actions, or lack of action, caused the
overpayment without any fault on the part of the VA.
In addition, the Board must also consider whether recovery of
the debt would result in financial hardship to the appellant.
In that regard, financial status reports were received from
the appellant in June 1998, August 1998, and December 2004.
In light of the contradictory nature of the entries on the
December 2004 report, the Board has considered that report in
light of the June and August 1998 reports as well as the
appellant's testimony regarding her financial status.
These reports reflect that the appellant and her husband own
their own home, that their mortgage is paid, and that their
joint monthly income is at least $3,500. Their monthly
living expenses were approximately $1500, and total monthly
installment payment on debts and credit cards of $1,156. In
1998, the appellant reported having significant assets,
including cars, real estate, stocks, mutual funds, and cash,
and these assets totaled approximately $180,000. In December
2004 she reported that her total assets were $38,953 (but
this did not include her real estate, which she continues to
own as evidenced by the fact that she continues to reside at
the property).
Although, the appellant's health has apparently deteriorated,
there is no evidence that her income has decreased or her
expenses have increased to the point that repayment of the
indebtedness is causing, or will cause, her to be deprived of
the basis necessities of life.
The Board concludes from all of these financial status
reports that the appellant makes enough money, and has enough
assets, to meet her basic monthly expenses, including her
housing, food, and utility payments. Thus, even though the
$60,477 DIC overpayment is substantial, based on the income
and expense information of record, it is concluded that
recovery of the debt, over a reasonable period of time if
necessary, would not deprive the appellant of life's basic
necessities. It has therefore not been shown that financial
hardship would result from recovery of the overpayment.
Another factor to be considered is whether the recovery of
the overpayment would defeat the purpose for which the
benefits are intended. In this case, the purpose of DIC
benefits would not be defeated as the appellant is no longer
receiving VA DIC benefits and she was not entitled to such
benefits during the period of the overpayment.
The Board also finds that failure to make restitution would
result in unfair gain to the appellant because she received
monetary benefits to which she had no entitlement. The VA
made payments of benefits based on marital information
furnished by the appellant. The appellant did not promptly
report the change in her marital status to VA, as required.
Under such circumstances, to allow her to retain the money
that was improperly paid would constitute unjust enrichment.
The Board must consider whether reliance on benefits resulted
in relinquishment of a valuable right or the incurrence of a
legal obligation. The appellant has not contended, nor does
the evidence show, that she had relinquished a valuable right
or incurred a legal obligation in reliance on her VA
benefits.
The record reveals no other factors that would make recovery
of the overpayment inequitable. In sum, recovery of the
pension overpayment would not be against equity and good
conscience, and thus waiver of recovery of the overpayment is
not warranted.
The preponderance of the evidence is against the claim for
waiver; thus the benefit of the doubt rule does not apply,
and the claim must be denied. 38 U.S.C.A. § 5107(b) (West
2002); Gilbert v. Derwinski, 1 Vet. App. 49 (1990).
ORDER
Waiver of recovery of an overpayment of DIC benefits in the
amount of $60,477 is denied.
____________________________________________
Mark D. Hindin
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs